tv Murr v. Wisconsin Oral Argument CSPAN June 23, 2017 10:28pm-11:45pm EDT
today, the supreme court upheld the wisconsin land regulations, which control how private property owners can use or sell the property. a familycenters on that wanted to sell one of two adjacent lots but were brought -- block because of regulations that require the land be combined or owned separately. the oral argument from march is one hour 15 minutes. chief justice roberts: we will hear argument first this morning in case 15-214, murr v. wisconsin. mr. groen? mr. groen: mr. chief justice, and may it please the court, the fundamental unfairness in this case is illustrated by one fact: if anyone else in the world, other than the murr siblings, owned lot e, that owner could sell or develop it. but the murrs cannot. justice kagan: mr. groen, may i ask -- justice kennedy: let me ask you this question. it's a hypothetical. it's not this case. suppose that three years from
now, lots such as these two lots in the same ownership become immensely more valuable than the two lots singly. each lot singly would be worth $100,000, but these lots where you can build a bigger home are worth $500,000. the county wants a fire station and it takes lot e. what do they pay for it under your theory? mr. groen: they should pay for compensation for the taking of lot e. any taking -- justice kennedy: which is $100,000. so under your hypothetical, property owners stand to lose $300,000 under my hypothetical and your answer. mr. groen: no, i don't think so. under the hypothetical - justice kennedy: the hypothetical is together, they are worth $500,000. singly, they're worth $100,000 each. what is the amount that the county has to pay to take lot e for the fire station? mr. groen: the analysis must begin with defining the relevant parcel that's the subject of the case analysis. justice kennedy: and in your view, that's lot e only. mr. groen: that's right. justice kennedy: and they pay
$100,000 only. that's it. mr. groen: the land owner would have the burden of proving that there are additional damages that they should be compensated for. but the presumption -- justice kennedy: you indicated there's no severance damages. you're taking the entire parcel. mr. groen: you're taking all of lot e, and they should be paid compensation for lot e. justice kennedy: that's right. mr. groen: whether that compensation is -- justice kennedy: that's $100,000 that go under your theory, land owners in the hypothetical that i put up would lose money and the state would be getting the >> york there he ignores market factors. >> that is what the government would argue is that the compensation must a limited to the parcel that is taken and eminent romain law that is the
hypothetical you are providing, the presumption is exactly that. compensation is limited to the parcel taken unless that presumption can be overcome by the land owner proving that the two parcels are actually -- there is a unity of use between the two. >> then why isn't that true here? >> it supports the theory. it's the same principle but in reverse. rather than the government alluding conversation, the toernment is saying we want combine the values of the to in order to find there is no taking. but in both scenarios you have to begin with the presumption of determining what is the relevant parcel that is subject to that analysis. in both scenarios, either eminent during main or conversation -- >> just clarifying questions
about your argument. there is one thing that makes this odd is that there are family members all around, booksellers are the same family and the buyers. but if i am right, your argument would extend in the exact same way. to a situation where you have two sellers who are completely independent of each other, mr. jones and ms. smith have nothing to do with each other, another buyer comes in has no relationship with mr. jones or mrs. smith. and that buyer would be able to make the exact same argument that the murder family is making in this case. mi right that your argument? >> i am not sure what you are talking about. >> you have to standard parcels, somebody comes in and by spoke. that all parties are independent of each other. now the person that has bought these two substandard lots want to build on them. and your argument would be the
exact same. >> that's right. they are each independent discrete and separate parcels. and the grandfather clause would protect the development and sale rights of each parcels independence. >> so where does the state regulatory power come in? for this oneetical owner to own two parcels or to different people to own two parcels and they sell it to your one owner and the one owner knows the regulation says if you have to continuous land pieces, you can only develop on one. if they are both below the maker or whatever the rule is. your rule would just do away with your expectations as a buyer. situation, thet fact that someone might know that there are regulations on properties does not change the time of the taking.
the taking occurs in 1975 when regulations redefined property rights. that redefinition of property rights to did -- >> it may be for the parents but they never charged it. the children were subject to regulation and they knew it. they could have said they did not want continuous ones, i will buy the next door lock from simply else. rhode island ruled that -- >> they should have known. >> let's assume that. know, theey should subsequent air or a buyer does not have -- does not lose a taking -- >> that is a different situation.
they also said if the seller has not taken the claim, it is not extinguished just because the property is transferred. the buyer could have the exact same take in this claim. but the murder children are not asking for -- they do not have the same take in this claim as the parents did. isn't that right? >> that's not right. they have the same take in this claim because we are talking about parcel e. >> parents can develop on parcel e, the children can't. it inthe parents put their common ownership, which claimid, there is a there. it's at the right inherent in the property and in all of these scenarios -- >> let me try this again. for the parents, the two properties were the two properties. it's only when the property becomes one property that this
take in this claim arises. >> the take in this claim arises because of the restrictions imposed by the government, not by change in ownership or anything like that. the change in ownership does not change the nature of the property interests. that's the key part of palazzolo. if you take away the takings claim or redefined property interests, you are changing or altering the nature of property. back nothere we come to takings analysis, but to provide the unit of property to -- >> i'm sorry. , the onlytion here thing it affected for the murder parents and for the plumbing company was their ability to sell to a buyer who wanted to combine these two lots. that was the only thing that was affected, isn't that right? tothe parents didn't seek
combine the two lots. the parents owned both parcels. they eventually put that in their own names as well in 1982 after the 1975 restrictions were in place. that did not merge the parcels. there has not been a merger here. it's simply a term that describes what happened and that's the restrictions preclude independent sale or development of lot e. that is the government of the takings claim. is merging rules have a long history and many states have been. so why isn't that background apply?aw that would >> there are lots of land regulations of all types, including merger provisions. we do not have a background provision here because you
cannot have a background principle that applies to one person but not to another. owned a lucky,e they could develop it. it's not a background principle to say this only applies to the murders. same thing with the neighborhood. 40s is the subdivision, over developed lots here. there is nothing about loving a home on this property that rises to the level of the nuisance or something that takes the right to use the property. -- of the title >> your answer is that all those other regulations are invalid. relations are fine and they come in all forms. the question here is whether you need property to utilize for determining the takings analysis. once you determine that, you determine under that larger law or whatever, does it reach a
level of magnitude of interference that there is a taking? that is what has to be analyzed on the merits of their own -- >> i thought your argument was that under state law, they were not formally merged. it was not an effective merger. that's exactly right. these remain separate legal lots of today. this term merger has been used very loosely and all it really right tothat the independently use and develop lot e has been destroyed. we don't actually give it away. >> do we know exactly how wisconsin and the county to find common ownership? if one lot is owned by in individual and that person's own name and the adjacent lot is owned by a wholly owned corporation or llc, is that considered to be common ownership? byif one bought this owned
four siblings and the other is owned by three of the siblings, with that become an ownership? >> the weight wisconsin has applied common ownership, as long as they are not in formally the same name, so william and dorothy merck, they owned their coming company and so they were technically in different ownership and that was enough to be -- >> would it be different if one owned one and the other over the other? way it's defined, it would encourage that kind of manipulation and incentives. >> i have not gotten beyond homes. holmes says the regulatory taking violates the constitution unless is compensated. when it goes too far. >> correct. >> what they want others to do is to put pretty clear lines in
the term, too far. the problem is i cannot think what the lines should be. perhaps there are different circumstances and factors. for example, in your case, i imagined that what the state was concerned about is that he want to preserve a lake. at the same time, they want to own some property around that lake and they used to be able to own properties. here is what they say. you can build one. it does not matter if you have parcels lumped together. one. that is what you can build because this constitution is concerned about protecting people. not rocks. and so we look at the people and say, how does this affect them? , you haves case factors against you in the federal circuit and other opinions of ours have avoided
drawing clear lines you see where i am going and i just want you are general response. this case does not address the merits of whether there is a taking. it has to deal with the threshold question of what is the relative unit of property. >> now you are not getting my question because i am saying, white look for that? visit relatives? yes. they will break them down into 500 different properties and the this,perhaps aiding in 500 different ones come up three of them will be wetlands and they will say, see? you took my three when he started out with 500. you see the kind of problem. i want a general reaction. >> the general reaction is you must begin with the approved legal lots of record that have
actually been approved and have obtained because the legal lots of record, they have rights. that's what it's all about. of the oddities of your position is that you seem to be taking half of state law. there are these lot lines and everything has to depend on the lot lines because they have been legally deep-rooted. but there have been other things that have been deep-rooted to. one of them is this merger provision. you are saying we want to follow state law for lot lines but ignore state law for when lots farmers. why should we do that. when a look at the whole ball of blacks question mark saying, when i buy those two lots, they really are not to lots anymore. according to state law they are one lot. both laws recognize that you
look to the state law that governs the creations that is .he legal recognition of law >> let's say you are right. it has something to do it lot lines and when lots are merged. when two lots are merged into one. why would we ignore that question of merger. >> there is two reasons. one, they have not been formally merged. and two, -- >> what would it take to be formally emerged? state would have to say the lot lines do not have legal effect. limitedonly for the purposes of precluding sale or development. more than that, your question circles right back to palazzolo.
where you really have to define rightsy interests by the that are already in place that secure benefits, that's what it stands for. and palazzolo points out the principle that you cannot then go forward and say the state has redefined -- >> palazzolo defined it as you cannot have the same take in claim. let me ask you a different way which is, question, when you think reasonable expectations matter at all in your framework. the reasonable expectations that were addressed are the expectations that grow out of the traditional understandings of property law. people understand when they buy in a subdivision that they are buying a lot that has a right of use, that has a feed, geographic
boundaries -- >> but if i am buying property in this area, i also know that there are these rules about when you can develop on substandard lots and how it is when continuous lots are understood for purposes of that development potential. so white aren't i buying subjects to those pre-existing regulations? a other words this is not regulation that happens to me when i am an owner. certain meets and bounds but i am also buying into of whatn set of things i can or can't do on the property. supposed to know the zoning regulations. when i buy a piece of land, i am buying subject to the existing
ining regulations >> understand the use of reasonable expectations, but we have to first determine what unit of he or the- is it lot lots combined? property is property. >> what we are still dealing a provision of the constitution that in the regulatory area is designed to prevent takings that hurt somebody unreasonably. it goes too far. so why isn't what you want to look at one thing to look at? but we might look at others too. we might look, for example, at whether the individual who bought that property at the time he bought it knew about this restriction. we might look at how overall he is hurt in any related way and look, for example, at the kind
of need that was there and we might see two big questions. i mean, one big question is it's awfully general, is is he being treated unfairly either because we're forcing on him the whole cost or a lot of the cost of something that benefits many, many others or because we are interfering with investment-backed expectations? as you read the case, it seems to me there are a set of factors like that and my problem with your argument is it wants to take one and then apply a kind of mechanical test. >> no. it keeps coming back to the task is to first find the unit of property. the murrs and parents have each distinct lots, each a lawful building site and if it is owned by anyone else it remains a lawful building site. under the restriction rules in
1975 -- >> may i ask a question. i do think as i'm reading all the briefs in this case that the issue is how much weight should we be giving to the state boundary lines, the state property lines. you say as a deno, ma'amminator -- denominator line is, what is the state boundary line. so i don't think presumption has any meaning in your brief. others like st. croix and the government and in justice brier's question is the nuanced calculations although st. croix, wisconsin and the solicitor seem to have a different weight to that.
so let's start with is yours a fixed presumption, or does anything overcome it? >> yes. >> or does any circumstance overcome it. >> you must begin with the identifying of the single parcel -- >> what overcomes that? >> that presumption is overcome if you have facts that is sufficient to show in fairness and justice that the individual should show the burden. we can draw out of eminent domain law, if you have a hotel owned by a person and they're -- they owned the parking next door, and the government is going to condemn the parking lot, the parking lot is used with the hotel as an integrated economic unit. the presumption is the government is taking only the parking lot and they argue we only pay for the parking lot.
the burden then shifts to the party owner to prove that the parking lot is an integrated part of the operation of the hotel. >> what's the difference between that and the factors that the other parties are using that says, look at how the property has been used over time, here the family has a house on one parcel, a volleyball court and a barbecue/storage area. they use the other parcel, house on one side, the other parcel as other -- parcel has access to the beach. the house has not had an economic value to the children. it was there. they're using it. so what's the difference in terms -- >> i think you have an inaccurate visual understanding of what the parcel is. lot e, this went up on summary judgment, is a vacant parcel.
there is nothing on lot e. it is an independent parce. the murrs will sometimes walk across it or may volleyball on it, but it's not an sbig rated unit as the hotel parking lot in the hotel. in that situation, you can overcome that presumption. >> why isn't it an integrated unit because they have a wark barbecue? >> they don't have a barbecue. >> whatever they have. >> volleyball court. >> volleyball court. under your hypothetical if the hotel was on lot f and the parking lot was on lot e, what would be the fair value if the state took lot e for a firehouse? >> can -- >> don't you figure out the value of that on the market? the buyer, not the loss to theel -- the seller because he's next door, it has to be. >> the rule begins with paying for the parking lot and the
burden is on the land owner to show that the person should get additional compensation for the impact to the hotel. that's where that -- >> that just can't be if they're separate lots. that's not the law in any state that i know. >> that's the unity of use rule that is in condemnation all the time and -- >> but that's when they have a single parcel. >> no. that's when they're two parcels. it's the hotel and parking lot example. >> well then under your view the land owner wins every way. if he gets the value, if the value is smaller -- >> for example, if the parking lot and the hotel they were just different parcels and the parking lot was serving some other property and the government took the parking lot, there is no damages to the parcel with the hotel and the land owner would not be entitled to anything. >> but you're the one who is
insisting on did i visible -- on the lots being treated separately. >> with the same presumption that you begin the analysis by identifying the relevant parcel. here that has to be lot e. it was purchased separately, separate deed. it was purchased for separate purposes and this is the lot that was regulated. >> we begin the analysis, what more is there if you're saying we isolate e and e now is of no value, it can't be sold, it can't be built on? what is the consequence of saying we isolate, we identify parcel e? is it the same as if the government physically took -- >> it is a practicalal effect
because the value of lot e is diminished from $480,000 to -- there is a $90,000 decrease in value. >> there is some use that can be made of the property. >> lot e cannot be developed on its own. that ability has been taken away. >> yes, but it's -- if the combined properties are sold, it's going to be a much bigger price tag than just -- than just f were sold. >> but the question is the murrs began with two building sites on the property. that was taken away. the value that you're talking about is the value that comes from being able to build. well, the murs already have a house lot on parcel f. how much would the murs or someone who owned lot e with an existing parcel on lot f pay to add land to it? how much would they pay to add lot e to the existing --
>> let me give you an example that might help me. let's go back to the holmes case. 100 acres, 50 columns of coal to hold up the ceiling. it's ok. no compensation. wait. suppose it's one person owning 50 acres, suppose 50 people each owned one acre. some cases the column runs through one, some cases it doesn't. does that make a difference? >> that hypothetical is not analogous to this situation. >> i don't care if it's analogous or not analogous. i'm trying to get my thinking clear and oddly enough similar things make my thinks clear and this may be one of them. >> the analysis has to begin by defining --
>> in your opinion, in your opinion, if in the homes case instead of one person owning the there are 50 people who each owned an acre. it looks the same, the columns are in the same place, you're saying that does make a difference. >> it does make a difference. it -- the key is to look at the property, and is that property taken the right way. >> the usual way or the least the frequent way is a developer buys 100 acres of land and that land is split up to 10,100 acre properties and 15% are on wet land and can't be built on. if the 15% are independent lots, because if they are, then the developer comes in and says you
have to pay me for that. but if not, the 15% is not -- >> the beginning part of your analysis says the developer subdivide. they cannot subdivide without government approval. and when there is a subdivision created within the laws of the state, then rights attach. >> the subdivision has occurred with government approval and the merger provision has occurred with government approval saying that this shouldn't be understood in the case of substandard lots as independent. >> the merger provision is like the wetlands provision, both restrict use and then the question then once you've identified the relevant parcel in your hypothetical, the question is, is there a taking of that 15%? the burden would be on the government to show that that 15% of the lots is actually part of an integrated economic unit as a
whole, and then you proceed under a takings analysis. unless there are further questions, i'd like to reserve my remaining time for rebuttal. >> thank you, counsel. >> mr. chief justice, may it please the court. i'd like to answer your question or the point that you made. the lots here have merged for all relevant purposes for state law. it is true that the lot line between lot e and lot f still exist but that has no continuing relevance under state law. >> your point raises my exact concern. you said for all relevant purposes. the question is what purposes are relevant? it seems to me what purposes are relevant is analysis under the takings clause. and we all know the issues that i think justice brier brought up, you have three acres of wet land and you say my property is all acres and you've
taken it all. you don't get to define property interests that way because it's gaining the system by saying this is what this is. now another one of my colleagues pointed out, half of it is the lot line and half is the merger. for taegz purposing you want to say all we're taking is the merger. that's just the flip side of what the land owner can't do. you can't premt this by saying we take this. like the property owner saying we only look at the properties where we win. >> yes, your honor i want to be more specific. i mean for all purposes under state law. if tomorrow somebody
went to the county register and deleted the line between the lots, there is no right that they would loss and not a single right that they gain. >> the point is they didn't do that, nobody did that. i'm looking at page 3 too the appendix of the county brief. it says they did not decide lots had been formed. these were effectively merged. on the other side, they can argue we effectively drew line around these two acres and it seems to me there is a confusion between the definition of property and the request of of whether or not there are takings. if you start analyzing were there is property that muddles the whole analysis. >> let me explain the state's methodology. the test to identify the relevant parcel in the state's submission should be one standard question. is the land owner issue completely separate from other land in state law. and there you look at all of state law and where the state
law lot line has no meaning for anyone. it does not give any rights which is the case here. >> so the flats are contiguous that's the end of the question for you, right? >> not at all, your honor. our test is if two lots have a link, a legal link under state law, then they are one parcel. if they have no legal link under state law, they are completely separate. >> you're talking about only state law. it seems to me that your position is as -- is as vulnerable to criticism as the petitioner's. you're saying whatever state law does that defines the property. but you have to look at the reasonable expectations of the owner. >> right, your honor. and i want to clarify. that what we're talking about here is just a threshold question. and after it is determination the reasonable expectation will be established. the county and the
the county and the rebuttal -- >> the reasonable expectation was based on the fact that you had a lot line rule which you've now changed. so you say that the state law changed reasonable >> your honor i want to be clear. when you're doing the second step, the pre-ziftexistence of the lot, the county, and my friends saying reasonable presumption you have penn center squared. it's not that far. the plumber and his wife buy a small law and they build a modest house and they say there is a lot next door, let's buy that, we can use it as a yard for our children when they're growing up and after they're grown, we can sell it and we'll have some money for retirement. and that's a buildable lot at that time. and then this new regulation is
adopted and now the side lot can't be sold at all. and the -- the -- they say you've taken away this valuable asset. we were going to use it for our retirement. and the answer is no you could sell your whole property and somebody who wants to build a big house could build on that property. and they say that's fine. but we like to stay in our little house. what is fair in that situation? >> i want to clarify. in your hypothetical when you had two lots existing and owned by the same person and involuntarily merged by the government. it is -- >> what do you mean they were involuntarily merged by the government? >> they had two lots. they were each completely independent under state law. a new state law comes in and says they are merge. that's a different -- >> would it fall under your
regulation? >> with the fundamental case here is the plaintiffs what they did when they acquired two contiguous substandard lots -- >> by voluntary action by state law and that's the consequence we're talking about. >> well, your honor, i think the question that justice kagan was asking clarify this point. that is to say, if you want in this case talk about what the regulation did in 1976 is put a conditional restriction on the parents who owned lot e. that's a very fine argument. except for the fact that it's completely contemporary to the reasoning in palozolo. justice kennedy's opinion rejects that and the debate between justice o'connor and scalia in concurrence is about exactly that. and you don't even cite
that in the brief. >> pages 41 to 43 we discuss why this is not a palozol claim. as justice kagan claimed that something happened in 1976 something happened that was unreasonable, and that is it took property without unjust compensation. there would have to be a lookback to see if the relevance taking test failed. it didn't fail here. the parents owned in 1976 lot e only. and their interest to lot e was protected by the grandfather clause. the only restriction upon the parents that was placed in 1976 by the state was a conditional sale restriction, that is, you can do anything with the lot you want, you can sell to whomever you want. you can't sell it to somebody who wants to buy it if they also own a lot next door and also is substandard. that is a conditional sale restriction, and minor restriction, and in
our pages 41 to 43 of the brief, they have -- >> go ahead. >> if one lot is owned by at wholly owned corporation or an llc and the other is owned by the owner in the owner's own name, are they considered to be under common ownership under wisconsin law? >> no, your honor. unless you can pierce the corporate veil. the county, which is the first line enforcer would interpret it that way. >> what way? >> if they are not literally the same person, husband or wife, two people and one of them owns one and the other owns the other and not the same -- >> may i -- >> i didn't hear the end. >> that is the ending much the county's.
>> that seems to make it seem -- injustice and fairness -- it makes it quirkily that these owners aren't not titled to treat them separately if they happened to record them in separate names they would be an entirely different situation. >> let me explain what the state is trying to achieve. it wants to phase out substandard lots in the long term. it does not want to interfere with any current investment-backed expectations. they'll have a slow phase-out. and it will be triggered by the lots and common ownership. that will happen in the long term. most people in this area want to bring it -- >> well, they won't after today or if you win. they will not smart enough to say, husband, you own f, i will own e and, by the way, you're my successor in interest under e and i'm yours under f and then we'll be fine. is it really -- does the whole takings issue base on that?
>> yes, your honor. they do that purposefully because they want to build a single house up on the bluff, a bigger house. so the reason -- and we think that will happen over time. it's already happened with eight property owners in this area. so while it is a slow phase-out of lots, it is a perfectly sensible regime. the balance is on one hand, the desire to protect -- >> i would suppose in my hypothetical, the husband owner on one side and the wife owner on the other side they can build a common house on the lots. lots. the merger of the two lots, makes it easier to apply -- comply with other regulatory regulations in the area, about minimum lot size, if you don't bring them into common ownership, then you're left with the nonconfirming structure --
>> may i have a background question? suppose the people had lot e and f merged and then they bought g and h, can they still build one house? just one? >> it would depend on the size of g and h, how much in the project area. >> both are just like these lots. >> if they have g and h can they build two. >> if law g is more than .2 of the project area, they can build one house and then the new lot gets them the new net project area. to have two buildable lots, you have to add up to more than two acres in the project area. >> it makes no difference under your approach that the two lots were taxed separately, does it? >> no, your honor. >> it makes no difference under your approach the two lots separating the two lots. >> that's right, yes, your honor. >> are there other circumstances that the lots were treated
differently under your approach. >> with regard to the tax assessor, that was an error that the tax assessor made. in fact, that fact melted strongly the rule that we urge. you look at whether the lots are separate under state law -- >> are these lots separate under state law? >> there is no legal situation in which the lot line between lot e and line f makes any difference. >> that's not quite an answer. are they legally separate under state law? they're still shown on the plat as separate lots, right? >> that's correct, your honor. >> the only sense in which the merger doctrine that you're talking about applies with respect to a takings claim? >> no, your honor.
with regard to every possible use or sale of these lots. any development, any sale, anything else a person in the real world would wouldn't to do, there would not be any difference. there is not a single action that anyone would take. the lot line between lot e and lot f as it currently stands -- chief justice roberts: and then so there's no reason -- under state law, there is a procedure to eliminate the lot lines, and you're saying that that procedure is irrelevant in this case? mr. tseytlin: given the specific facts of this case it would be completely irrelevant. no one would go through that process because it would not add or subtract any single right to the murrs if they -- justice kagan: general -- mr. tseytlin: -- deleted that lot line. justice kagan: may i ask a question? the difference between you and the other folks on that side of the room is that they want to look at reasonable expectations, and state law, in part, defines those reasonable expectations,
but they're allowing for the idea that other things might come in as well, and you're saying it's all and only state law. now, i'm pretty sympathetic to the idea that preexisting state law really does influence quite a bit your expectations about what property you own and what you can do with it. but still, what's the harm of doing what the government and the county want rather than what you want in terms of saying the analysis should be a little bit more fluent, fluid, sure, state law matters, but maybe other the things matter too in a particular situation. mr. tseytlin: because what you get with any of their approaches is penn central squared. that is to say, you have a complex multifactor analysis, basically an all-things-considered analysis at step one, just to figure out the parcel. and then, in the vast majority of cases, you then do a complex multifactor analysis and you -- which is going to look at a lot of the same factors. i think one area of agreement among the parties and amicus briefs in this case is this is -- area of law is incredibly complicated. it's difficult to make your way through the weeds. justice alito: would it matter to you if it were not possible to build a house that bridged the two lots? suppose one was at the bottom --
one lot is at the bottom of a cliff and the other is at the top of a cliff. would that matter to you? mr. tseytlin: in defining what the relevant parcel is it would not. it would matter quite a bit in doing the hard work of doing the penn central analysis, and that's one of the key points i'd like to reemphasize. we believe -- may i finish my sentence? chief justice roberts: sure. mr. tseytlin: we believe that most of the work under takings law should be done at that like to reemphasize. second step, usually penn central. we believe the first step, the parcel question, should be determined in a straightforward way so the court can move on to doing the hard work of penn central. thank you, your honors. chief justice roberts: thank you, counsel. mr. lazarus. mr. lazarus: mr. chief justice, and may it please the court, just like cities and counties in at least 33 states have done for
decades, for more than 40 years, st. croix county has excluded from its grandfather clause for preexisting lots commonly owned substandard adjacent lots. during all those decades, no court at any time in any jurisdiction in the united states has held that exclusion amounts to a taking and for good reason, it's fair and it's just. and the same reason -- chief justice roberts: well, that's -- and it gets to the questions i was asking early, fairness and justness. and if -- actually the -- the point is -- last made by -- by your friend, there are two different questions. what is property and whether there's been a taking. and i thought the question of fairness and justice is justice is applied to the second question. i didn't think it was applied to defining what the property was because then you really do get, as he said, penn central squared. you're looking at fairness and justice. how should we define this property? well, fairness and justice for what purpose? well, for the takings clause. and then once you define it, then you say well, it's fairness and justice for whether there's
been a taking. it seems to me that you're just kind of teeing up the definition of property to give you the right answer under the takings clause. mr. lazarus: your honor, in -- in this case, in valley, there is some circularity here, but let me tell you why there is some circularity here. and that is because they're making and taking the challenge to a very odd -- a very odd topic, and that is the absence of an exclusion. and -- and the reason why there's no exclusion for these kinds of substandard commonly adjacent lots is precisely because government has determined over decades that, in this situation, the economic impact isn't so great. there isn't so hardship. so, the premise of the -- of these ordinances is the absence of hardship. and since the purpose of the penn central analysis or the lucas analysis for economic impact is to identify when the hardship really is so great to justify the payment of just compensation, it's not surprising that the very teachings of these ordinances is directly relevant to how you evaluate the property. justice alito: how can you say that the impact is not -- is categorically not great? if some -- somebody buys a lot
next to that person's house with the expectation of selling it at some point in the future to meet real needs that come up then, and then the -- a regulation is adopted that says well, sorry, you can't sell it, that there's no hardship there? mr. lazarus: the -- the hardship -- the question though is how do you define the extent of the hardship. and what you want -- what you need to look at under the penn central analysis is what the economic impact is, and to define the parcel part of that is to -- to identify what the impact is. for instance, in this case, the economic impact on the murrs, right, has to take into account the shared value of the two because the fact is, if you look -- there is no general issue of material fact with the lower courts on this question. the value of the two parcels together for one house is $698,000. the value of two houses separate, with a house on each, is $771,000. justice alito: well, that's fine except that, in order to realize the value of the two lots put together, they would have to move away. mr. lazarus: right. but -- and -- and the -- and they -- justice alito: now, they think that's irrelevant. mr. lazarus: the takings inquiry
is what the economic impact is on them. it shouldn't be a different test depending upon their particular subjective preferences, then someone else's subjective preferences. the fact is -- justice alito: i thought the -- i thought that what you're saying is we have to look at what's fair and just, and now you say, well, we disregard the situation of -- of the particular people who are involved. mr. lazarus: well, no. you're looking at -- it's several things. you're looking at first what the economic impact is. define the parcel in a way which actually evaluates the real impact. not a fictional impact, but the real impact. the real impact here is very little. you're also taking account the state law. you're looking at the law at the time to figure out what the reasonable expectations are of people. you're taking that into account as well. the other thing you're taking into account, your honor, is the point you mentioned before. contiguousness by itself wouldn't be enough. we aren't arguing that. one thing you look at is the state law for expectations. you'd also look at the physical and geographic characteristics of the property. in other words, to find out whether there was any real potential here for unity of use and integrative use. for instance, in this case, if lot e and f were different and you had one up above and one
down below, that might well be a harder case to suggest that there was that kind of unity of use, integrated. and you look at those three things, because what you're trying to look for to evaluate the parcel is you're trying to see what the real burden is that people are suffering in the case. you know, it's a remarkable finding that there's such a little difference in value between one house on two and two houses each on one. and the -- and the reason for that, there's actually a formal term in economics for it. it's called the complementarity principle. you don't need to know that term. it's just common sense. there's some kinds of property, land is one of them, that can create value joined that doesn't exist when separate. the most extreme example are shoes. no one would pay very much for just a right shoe or a left shoe, but they pay a fair amount for the two shoes together. land is not an extreme example like shoes, but the same phenomenon exists -- chief justice roberts: it seems to me you're -- you're trying to figure out then what the land interest is. and usually there's a regular way to do that, which is you go down to the county office and you look at what the -- the
lines are between your property and somebody else's or your lot and a different lot. you don't look to whether one is below and one is above, or that, and it seems to me that gets into a very complicated situation when for federal takings purposes you're redefining what state law says property is. mr. lazarus: what -- what you're doing -- what you're doing, your honor, is you're trying to determine the economic impact. there's no question state law defines what you own, but the question of whether it's a taking -- it's a question of federal constitutional law, and the economic impact inquiry has to see to what extent there really is this incredibly disproportionate burden they're facing or not. in -- in the penn -- in the penn -- oh, sorry. in the penn central case, in the keystone bituminous case, every one of those cases state law defined as separate property interests, things can be bought and sold, the air rights can be bought and sold, the support estate can be bought and sold, the mineral estate can be bought and sold under state law. there are distinct property rights under state law, and the court nonetheless, as a matter of federal constitutional law, joined them together because the
court wanted to find out whether, in fact, there was that kind of economic burden. and they even did it in cases involving lot lines. justice breyer: well, what about adding here when i look to see the reasonableness of the regulation. i mean, suppose in holmes' case, the regulation had said you have to leave columns of a thousand feet of coal. but every expert said, or everyone who knew about it, said you don't need more than 50 feet. mr. lazarus: well, certainly it's true, the ultimate analysis, you pay attention to reasonableness. you -- you pay attention to whether the government -- you don't get to accept the government saying it doesn't automatically qualify -- justice breyer: does that fit in your three? mr. lazarus: absolutely, your
honor. it fits under penn central. and in this case -- in this case, this is really the easy case. it's almost a sui generis case because the -- the state law at issue was one which -- which is premised on the notion that under this circumstance you actually don't face such a great hardship. that's exactly why they don't get the exemption. this isn't -- they are not challenging restriction. they're actually challenging not getting exemption which someone else is getting. and the reason they're not getting that exemption is they don't have the same hardship that other people have. the -- the owner of the isolated lot, substandard lot, asks for some kind of exemption. they face the prospect of a complete economic wipeout. but the owner of two substandard adjacent lots, they don't. that person, like the murrs, they have development options. in addition, they have the opportunity, as i said before, to create value, value that doesn't exist separate. and in this case, the value of joining the property together, the reason why this property -- which is beautiful property, stunningly beautiful, st. croix river, at the bend of the river. the reason why it's so valuable is two things, river frontage and privacy. that's the touchstone of value here. lot f is only 58 feet wide at the bottom, the distance between the two columns in this room, and right next to a public area. lot e has a hundred feet, twice that, of river frontage. and off to the west, more privacy. when you add those two lots together, the value of this luxury lot at the bend of the
river is so great, it actually almost overcomes the loss of value of not having the second home on the lot. justice sotomayor: i'm sorry. i've had a problem with the appraisal figures, and it may be a step i'm missing. why would anybody pay $400,000 for a lot they can't build on? mr. lazarus: because -- justice sotomayor: the two values -- your example said the two lots put together are less valuable or more valuable? mr. lazarus: just a little less valuable. justice sotomayor: yeah. i know there's only a 10% difference. but as i understood the appraisal figures, and are now using estimates, each lot was worth about $350,000 and $400,000 separately, for a value of $750,000. together, they were valued at $680,000. so they weren't -- you didn't double the price -- mr. lazarus: no. but what you do -- if -- you didn't lose very much. by not being able to build a
second home, the value doesn't sort of halve. instead, the value goes only by -- down by 9%. and the reason is that the combined lot is this luxury lot. this is a high-end area -- justice sotomayor: i understand why the combination, but why would anybody buy the lot you can't develop on? mr. lazarus: well, the question is not the -- what the value of lot e as a unit that you can't develop or -- or build on. the question is what the value of lot e is to the murrs, who also own lot f, because that's how you define what the burden is to them. and the burden to them -- if -- if someone only owned lot e, then the hardship exemption would apply and they could build. that's exactly the distinction that the ordinance draws between the two. justice breyer: is this right? just say yes or no, and if it's wrong, i'll figure it out later. [laughter] justice breyer: are you saying -- look, of course you look at the lines that the state draws, but that isn't determinative
because you want to know the total impact on the person, which may get you to look at nearby property or other things. you want to know how reasonable this regulation that affects it is. you want to know whether he knew when he bought it, and perhaps there are others. is that basically what you're saying? you're not denying that you look at the state's lines. it's just that they are not determinative? mr. lazarus: mr. chief justice, may i answer the question? chief justice roberts: he wanted one word. mr. lazarus: yes. [laughter] mr. lazarus: yes. yes. chief justice roberts: thank you, counsel. ms. prelogar. ms. prelogar: mr. chief justice, and may it please the court, i'd like to begin with your question, mr. chief justice, about why it wouldn't be sensible to just look at lot lines here as the starting point for defining the parcel as a whole. and as justice breyer just noted, we think the lot lines are certainly relevant, especially insofar as they might shape reasonable expectations about how property owners expect
to use their property and what they expect to remain separate and distinct. but we urge this court not to adopt a presumption or a bright line rule that focuses on lot lines in isolation. and we really see two principal problems with that, one of which is practical, and the other is legal. chief justice roberts: well -- i'm sorry. go ahead. ms. prelogar: turning to the practical point first, especially when you're looking at contiguous commonly-owned property, which is the situation the court is confronting here. we think that lot lines will frequently not be an accurate indicator of how that claimant is being burdened by the particular regulation, and that's because when you have those contiguous commonly-owned lots, there's a physical unity that frequently opens up the potential for linked use, linked development, a direct reciprocity of advantage, and shared value. and so, when thinking about how to address the parcel as a whole issue, where the whole purpose, the whole point is to get a feel for how the regulation is actually impacting this claimant, focusing on lot lines would exclude relevant considerations about the
on-the-ground economic realities. chief justice roberts: so that's -- i just don't know how that works with -- with property. not asking whether there's a takings, but asking whether there's property. you say it -- it depends on spacial, functional, and what's the third thing? ms. prelogar: temporal. chief justice roberts: temporal considerations. well, you usually don't say that when you're asking about property. you say, i own lot e or i own lot f, and here it is on the map, that's what i own. you don't sit down and say: well, but with spacial considerations i own this much of it, and when temporal considerations, add this, and functional that. it seems to me that those concerns are pertinent at considering whether there's a taking of the property. but when it comes to what the property is, that's a whole different question, and you don't get into spacial, you get into what the plat looks like in the county office. ms. prelogar: i think it's absolutely the case that for terms -- in terms of defining what's a protected property interest, at the outset you look to state law, you look to lot lines, and no one's contesting here that there's a protected property interest. but we think that this relevant
parcel determination does come into the second part of the inquiry in terms of whether there's been a taking. it's about how do you get a feel for the -- the relevant unit of property that's at issue to determine how this regulation is actually affecting this claimant, and so we would put those considerations on the takings side of the line. this court has always shown a preference in deciding, as justice breyer said, and -- and justice holmes' famous formulation, whether a regulation goes too far, the court's always shown a preference for being able to engage in that kind of contextual analysis that focuses on all of the relevant facts and circumstances. justice sotomayor: the problem i have with your test, which has the -- the three components, is i don't actually see anywhere in there any weight given to the state property lines. ms. prelogar: well -- justice sotomayor: you don't explicitly list it among those three items. you don't tell us how you're weighing it or not weighing it, what presumptions you're giving it or not. so where does it fit in to your -- your three factors?
ms. prelogar: we think that it frequently goes to the functional considerations because it shapes expectations about how land can properly be used, whether it's an entirely separate and distinct issue. so, we do think that there's a role for state law to play. and here we think, actually, that's one of the -- justice sotomayor: if we think there should be more of a role, where would you put it? st. croix puts it on the second prong. where would you end up putting it, and why do you disagree with how they use it? ms. prelogar: i think it's very important not to adopt any kind of presumption or bright line rule for the relevant parcel. and so i also would put it on the second prong of conducting the penn central analysis. but the reason for that is because the relevant parcel that the threshold definitional question is going to provide the touchstone that contextualizes the whole rest of the takings inquiry. and if the court were to artificially narrow it and look only at lot lines, or to give presumptive weight to those lot lines, then that's going to be the focal point for measuring economic impact for looking at investment-backed expectations.
justice alito: suppose you have lots that are not contiguous but they're very close to each other. now, under your flexible approach with all these different dimensions, are they ruled out as a single parcel? ms. prelogar: i think it would be very difficult to say that those kinds of noncontiguous properties function as an integrated economic unit. so, i think it would be the rare case where it would be appropriate to aggregate those property interests. but i think that it is important to keep in mind that there are so many different ways that property interests arise, that it is important to have a flexible, nuanced approach here. and, justice alito, i would just point to the example we raised about the large developer who acquires a large tract, maybe a thousand acres of property, and subdivides it into hundreds -- justice alito: that can easily be taken care of by making the rule look to the -- the lots as defined at the time of the acquisition rather than something that was done prior to -- prior to the time when -- when a rule would be -- would be
applied. but, you know, it's fine to say that there are all these dimensions and they should be nuanced and who can be opposed to something that's nuanced. but what are we looking for? what are we looking for? we're looking at all these dimensions to determine what? could you just say as precisely as you can what we would -- we should be looking for in defining what is the property that is taken using all of the different dimensions that are relevant in your view? ms. prelogar: i think the clearest articulation i have is to say that you should be looking for what in the interest of fairness and justice is an accurate way to measure economic impact. and that's the point of the relevant parcel determination. it's focused specifically on the economic impact prong of the equation. justice alito: and is it the economic impact on these particular owners or on some category of hypothetical owners? ms. prelogar: it's always been an individualized inquiry focused on these particular owners. and i think that the facts of this case well illustrate the point that when you're conducting that kind of
evaluation, it's often the case, as mr. lazarus said, that you're going to have a shared value, a reciprocal value that -- justice alito: but what if a lot -- but what if a lot was -- was preserved? what if it was bought for the purpose of selling it at some point in the future and/or it was preserved for that purpose so that nothing was built on it so that it could readily be sold? point in the future and/or it ms. prelogar: i think that those kinds of reasonable investment-backed expectations have a role to play, but i don't think that they can be dispositive. because, again, the point of the relevant parcel determination is to accurately gauge economic impact. but i do think that it's important -- justice alito: well, why wouldn't they be determinative? i thought you said it was we look to legitimate expectations. there, their expectations are completely frustrated. ms. prelogar: it's certainly the case that anytime anyone's alleging a regulatory taking, the premise of the claim is that they're being prevented from doing something with their property that they wanted to do with it. we think that that's not sufficient to alone define the relevant parcel because it might be the case, as it is here, that there's actually not much of an
economic impact at all. and if that's the case, then this isn't the kind of regulation that is requiring someone to shoulder a burden that in the interest of fairness and justice should be -- justice alito: well, that comes back to my -- but -- but you're saying that they have to move. they can't afford to build a big house here, which is what everybody wants. they don't want these little modest houses anymore. they want mcmansions. they -- they have to move. that's what you're saying. ms. prelogar: but to the extent that a court were to conclude that that is an undue interference with their investment-backed expectations or that the character of that government action is actually unjust and anomalus, then i think that this court's precedent already builds in sufficient protection for those kinds of interest without trying to rely solely on expectations to identify the relevant parcel. justice kennedy: i -- but i thought reasonable investment-backed expectations were objective. you're now making them subjective. ms. prelogar: oh, no. to be clear, justice kennedy, we do think that it has to be an objective inquiry. and i understood justice alito to be focusing on a fact pattern where the property was acquired before the relevant regulatory
restriction was enacted and thereby frustrated the expectations. here, we think it's actually a critical fact that petitioners voluntarily brought this land under common ownership and so triggered the application of the merger provision decades after the relevant regulatory restriction was in place. and that does weaken the idea that there were any objectively reasonable expectations -- justice sotomayor: well, i actually think they did it -- the parents did it after the ordinances, from my timeline, -- the ordinance's, from my timeline, creation. the ordinance was passed in 1976. and in 1982, the parents took the property under common ownership from the atlantic plumbing company. ms. prelogar: that's correct. so that there -- justice sotomayor: so neither the parents or the children, if they had been paying attention to the regulatory scheme, had a reasonable expectation that the ordinance wouldn't affect them. ms. prelogar: that's exactly correct. we think that the timing here of the relevant transfers of property reinforces the idea that it's proper to view these two parcels together as an
integrated whole. and the other facts that i would add to that are the spatial ones, the fact that these are contiguous commonly owned tracts with possibilities for linked development and linked uses that creates that direct shared value that is borne out by the valuation evidence in this case. because it is significant here that if you view these lots together as an effectively merged parcel, as they are under state law, then the value is only 10% less than the value of two separate lots with two separate building sites. chief justice roberts: but by saying "effectively merged," you mean not really merged? ms. prelogar: absolutely. we're not suggesting that the lot lines have been erased here. and so we do think that those lot lines continue to have a role to play. chief justice roberts: except with respect to takings. prelogar: no. ms. prelogar: no. ms. prelogar: that's exactly correct. we think that the timing here of
chief justice roberts: thank you, counsel. mr. groen, you have four minutes remaining. rebuttal argument of john m. groen on behalf of the petitioners mr. groen: thank you. beginning with the multifactor nuanced approach, the reason why that kind of approach to defining the property interest -- remember, the first issue, you have to define the property interest that is the subject of the takings -- of the takings claim. the reason is because the whole real estate industry, from mortgage lenders to property owners to title insurance companies, all rely upon the geographic boundaries. and it's exactly as was suggested -- justice sotomayor: with the regulations that affect those boundaries. mr. groen: i'm sorry? justice sotomayor: with the regulations that affect those boundaries. whether it's a title company or anyone else -- mr. groen: but we -- justice sotomayor: -- they look at what the paper talks about as a property line and what regulations do with respect to that line. mr. groen: and when the regulations redefine and impose a new definition, the reliance that previously existed is undermined. and that is the gravamen of the
takings claim. it is not a redefinition that absolves liability. justice sotomayor: so what do we do -- mr. groen: it's a redefinition -- justice sotomayor: -- with the fact as i see it that these properties were bought separately, one by the parents, the other by their company, and that post regulations, knowing exactly what they were doing -- and you say they didn't, but that has to do with their choice, because you buy everything subject to regulation. you may not choose to look at it, but you -- you should. ignorance of the law is not a defense anywhere. i don't know why it should be in the regulatory context. but putting that aside, they took the title to the property in their own names post regulation. mr. groen: yes, they did. this is a normal american family who understands when you buy property and you have a deed and it's zoned for residential use in a subdivision, you get to use
it. and you get to pass it on to your kids. justice sotomayor: but you get to use everything you own with -- subject to regulatory requirements. mr. groen: that's right. justice sotomayor: i buy a piece of property 10 years ago or 20 years ago, and i didn't know i had to put a sprinkler system in. today, if you want to do any kind of renovation, you got to put one in. mr. groen: but -- alderson reporting company justice sotomayor: there's lots of regulations that you didn't buy expecting -- mr. groen: that's right. justice sotomayor: -- but they do affect you. mr. groen: but the murrs bought two separate parcels that comprised two separate building lots, and that has now -- justice sotomayor: they -- mr. groen: -- been taken -- justice sotomayor: they -- mr. groen: -- away from them. justice sotomayor: they didn't buy them. mr. groen: that -- justice sotomayor: they got them in 1982 subject to knowing that they could only develop on one. mr. groen: well, that circles right back to the palazzolo argument that we discussed earlier. the other issue i'd like to address is this reliance that -- that i -- that we're just talking about with subdivisions and deeds, that is a system that all of this country relies upon. and if we're going to undermine that, that is a serious step in taking away rights and property
that people traditionally understand and use in their daily lives. that's the protection that's talked about in roth v. board of regents. the second thing is this valuation question. and couple of points on that. all the discussion about, well, the property is valuable because it's waterfront, all of that discussion goes to the merits of the takings claim; in other words, how much economic impact is there? the first step is to define the relevant unit of property for analysis. and that step is looking at the deeds and the -- the geographic boundaries of lot e. that is the presumption. when you turn to the valuation question, the notion that lot -- the combined lot e-f has value because it's waterfront, that is ignoring the fundamental aspects that the valuation in a residential lot is because you can build on it. and that is what has been taken
from the murrs. they previously had two building sites; now they have one. the valuation that the county discusses, the value is not attributed to lot e, because lot f has the building site. so, really, the county is getting a windfall by suggesting that, oh, well, you can have this bigger, better lot, and that will enable you to -- to recover from the compensation. that goes to -- to the question on -- we have of how do you -- how do you determine the amount of damages? thank you very much. chief justice roberts: thank you, counsel. the case is submitted. >> the supreme current term included 64 cases covering issues from immigration and to congressional redistricting and the racial bias nest of terry's. this monday is the final decision date in the court term
for the six remaining cases that are undecided. learn more online at c-span.org where we have a webpage dedicated to the court. some of the features include biographies of all the sitting justices and audio of oral arguments heard by the court. this weekend on american history tv on c-span3. saturday at 6:00 p.m. eastern on the civil war, the disbanding of the confederate army of northern virginia is discussed by purdue university professor erland janney. >> remember, lease terms, the terms of smx, surrendered his army. they said nothing about the clearing of the confederacy defunct. there had been no peace treaty and as of may 9, jefferson davis remained on the run. 8:00 p.m., on lectures in history, university of notre dame history professor on the oil boom of the 20th
century and the expansion of oil is this is to saudi arabia and canada. >> a geologist frames the theory of oil as american oil reserves collapse by really 1970, forcing the country into a difficult situation. -- apocalyptic fear of america losing its oil sources is going to drive exploration abroad. >> sunday at 4:00 p.m. on real america, the 1979 united nations film, the palestinian people do have rights. >> violence breeds hatred, retaliation brings only further and i for an eye is often paid in high interest rates in our day and age. >> at 6:30, president reagan's speechwriter and former ambassador to germany recalled reagan's 1987 trip to berlin and
the speech. >> i knew it was a great applause line and authentic history asan, but president obama says, is an art. we would never celebrate that famous speech if in fact the events of 1989 had not transpired the way they did. >> for our complete american history tv schedule, go to www.c-span.org. earlier today, nevada senator announced he was against the health care law replacement bill. the 50 gop senator to publicly oppose the draft legislation. speaking at an event in las vegas, the sundered said there would have to be significant changes to the bill for him to support it. he said the rollback of medicaid isansion is a tough issue he concerned about. without democratic support, senate republicans can only
afford to lose two votes from their party in order to get the measure to a tie-breaking vote by the vice president. it can come up as early as next week after it is scored by the congressional budget office and debated by the full senate. coming up on c-span come we take a closer look at health care law bolton.x that's followed by president trump signing a bill today at the v.a. to be fired for misconduct. later, george w. bush and laura bush discussed ways to help veterans tradition back to civilian life. ""washington journal continues. with alexre back bolton to talk about the senate health care legislation and how it compared to the other version -- the senate republican version and the house version as well as what this means for the affordable care act. thanks for being here. i want to begin with what happens next. our